D04 - Including CCUS in China Emissions Trading System

The PFP1report for the ADB CCS Center for
Excellence (Guangdong) Project RDTA8714-D04

Including CCUS in China Emissions Trading System

LiangXi, Li Jia, Wang Lan, Jiang Mengfei, Wang Li, Liu Muxin, Xiaolu Chen


Carbon Capture, Utilization and Storage (CCUS in short) is considered as an effective technology to achieve greenhouse gas (GHG) emission reduction. In December 2015, Asian Development Bank and Chinese Government published a Roadmap for Carbon Capture and Storage Demonstration and Deployment in the People’s Republic of China on COP21. Chinese Government announced that China GHG emission will reach its peak in2030. Carbon Emission Trading System (ETS) is an important method and including CCUS in China ETS is an important approach for carbon emission reduction.

From 2011, China ETS pilots were implemented in 2 provinces and 5 cities, and the carbon emissions tradingnominal total coverage (including direct and indirect emissions) has coveredmore than 40% of local direct carbon emission expected. Until September of2017, the total GHG emission allowance trading in these 7 regions has exceed 197million ton, as 4.5 billion RMB. In these 7 regions, Hubei province achieve thehighest total volumes and Guangdong province won the second, and then is Shenzhen, Shanghai, Chongqing, Beijing, Tianjin and Fujian. At the end of August 2016, 125 projects have been approved by National Development and Reform Commission (NDRC) as Clean Development Mechanism (CDM) in Guangdong province. Therefore,Guangdong province is the place for low-carbon transition, carbon market development and the exploration of including CCS in China’s ETS.

On 19 December 2017, China formally launched its national emissions trading system, which will be the largest emissions trading system worldwide. The China’s national emissions trading system initially only covers power sector, more than 3 billion metrictons of carbon from about 1,700 power companies will be included in the market. China’s ETS will gradually expend its market coverage to include other sectors in coming years.

This research project is under the supported of Guangdong Development and Reform Commission. According to the national and international researches, this report analysed the impact on CCS project financing after including CCS in ETS, and explored the specific implementation method of including CCS in ETS. The key messages of this report are: introduction on the international experiences of including CCS in ETS; discussion on the main methods of including CCS in ETS, the carbon emission computing methodology and Monitoring, Reporting andVerification (MRV) System construction of CCS projects; and research on the impact of CCS project financing after including CCS in ETS.